Malta’s rent laws, permitting a “forced landlord-tenant relationship” for an indefinite time and at a rent far below current market value, were once again declared unconstitutional by a Maltese court.

The pronouncement was delivered by the First Hall, Civil Court in its constitutional jurisdiction in a case instituted by the owners of an old, spacious tenement in the historic Żejtun village core, leased to a couple in March 1995 and since transformed into their family home.

The tenants had carried out many repair works and improvements to the place and claimed to have no alternative accommodation.

On the other hand, the landlords, who had stepped into the lease entered into by their predecessors, claimed that the annual rent of €286 fell far below the current rental value of the property as estimated by an architect at €522.50 per month.

The landlords sought recourse before the Courts, suing the Attorney General and the lessee couple for an alleged breach of their right to the full enjoyment of their property as safeguarded under the Constitution and the EU Convention, whilst requesting adequate compensation.

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In terms of Chapter 69, The Reletting of Urban Property (Regulation) Ordinance, leases signed prior to June 1, 1995 were protected by law, thereby denying landlords the right to revise the rent in line with market prices.

The Court, presided over by Justice Mark Chetcuti, rejected the respondents’ argument that the applicants had freely entered into the lease agreement well aware of the existing legal regime.

Although the owners had signed the agreement after the entry into force of Chapter 69, that could not be interpreted as a ‘free choice,’ the Court observed, citing European jurisprudence which declared that the landlords could not “reasonably have foreseen the extent of inflation in property prices in the decades that followed.”

Nor could the landlords’ acceptance of the rent, for a one-year term between March 2018 and March 2019, be interpreted as a waiver of their litigation rights, which waiver could only be inferred through “clear and unequivocal evidence,” the Court went on.

Amendments to local rent laws in 2009 and 2010 offered little comfort to landlords who were forced to accept a rent that could only be revised according to “draconian” restrictions, the Court said.

Whilst declaring that the landlords’ rights had been breached, the Court observed that the applicants had “no real hope” of regaining effective possession of their house since the current lessees had children who shared the same residence.

After taking into consideration various factors, including improvements effected to the property by the lessees, the key money forked out, the difference in estimates reached by two architects as well as the ongoing lease, the Court ordered the Attorney General to pay €10,000 by way of compensation to the landlords, whilst declaring that the tenants could no longer claim protection under the current legal regime as regulated by Chapter 69.

Lawyers David Camilleri and Joseph Gatt assisted the applicants.